Zandi Warns High Interest Rates Are Already Damaging Economy

Mark Zandi, chief economist at Moody's, is warning that elevated interest rates are already taking a toll on the U.S. economy. He says the damage could deepen if rates remain high into next year, according to remarks reported by Yahoo Finance. His assessment adds to concerns about how long the economy can withstand restrictive policy.

Zandi highlights rising long-term bond yields as a key source of pressure. Those yields translate into higher borrowing costs for consumers and for companies with heavy debt burdens. That dynamic can weigh on spending, hiring, and investment across the economy.

He also points to geopolitical friction and the Federal Reserve's lack of clear forward guidance as factors driving bond yields upward. When investors lack a firm sense of the policy path, uncertainty can push yields higher. That makes planning harder for businesses and households alike.

Even so, Zandi suggests AI-focused technology giants may be an exception because of their high margins. For much of the broader economy, though, persistent high rates remain a growing concern. The warning underscores the difficult trade-off facing policymakers as they seek to cool inflation without causing unnecessary economic harm.